This week Christine talks about all of the hidden advantages of opening up an RESP for your kids at a young age. Here’s a hint, do it right and get free money put into it every year.
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Welcome to its personal finance Canada. I’m Christine Conway and I’m Cameron Conway and this podcast is a very personal look for personal finance in Canada. *Hi Everyone, and welcome to It’s Personal Finance Canada. As always, I’m Christine Conway here with Cameron Conway, and today we’re going to be talking about the very fun subject of saving for your children’s education. *Yeah, because they don’t really pay for themselves until they get older and they have a good job. But to get a good job you really need an education now. I remember when I was younger, just having a high school diploma was considered the baseline for competency, but now it seems like you need a master’s or a doctorate for even for a basics kind of job these days. So it’s really important now to save for education, because it’s getting more expensive and the requirements for even simple jobs are just getting higher and higher. *It is true, the bar is definitely getting higher and just kind of taking a quick look at some of the stats on the Internet earlier today. The cost of a bachelor’s degree in Canada is all the way up to nearly $30,000 these days. So as parents, we all want to give our kids the absolute best in life and as much of a head start as they can so that they get to the place where they’re able to have a good job themselves one day. Raise a family, pay for housing and all of the other increased costs that are happening. And I know as a young parent or as a parent in general, there are a lot of things that are pulling for your money. Money is going in different directions all the time. You know you’re managing your household, paying for diapers and kids activities and things like that, and savings for a child’s education. It can kind of fall by the wayside and I think that’s part of the reason why some of the plans that we have available, some of the programs the government has put out, have some pretty big incentives to help us save and any extra money that you can get for your kids to help them along the way. It’s a great thing. Think of it as found money. *Well exactly, we’re getting taxed anyway, so we might as well get some of the benefits out of this. And if we’ve got kids, you want to put them in school one day so they can have a better life here or another country at all, pay better if they had a high education. *It’s true, you know what, a lot more people are looking internationally, and one of the benefits of being Canadian is, relative to some other places, like our neighbors down south, education here is still reasonably priced for the quality of education that you get. *Well exactly, this is why it’s good to plan ahead. Either they go to college, university, trades or something. You want your kids to have the best start once they get out of high schools. They get trained up and who knows, maybe they’ll be taking care of you someday. *And then all that saving and hard work will pay off, right. So let’s let’s talk about how to get your kids on the right track and look at some of the differences in the plans that are out there and why you would want to do these in the first place. You know, why put your hard earned money towards this through a registered education savings plan instead of sticking it under your mattress or in some other device. *I prefer the floorboards. *Whatever keeps it safe and out of trouble, right. *So, you mentioned before you can get some free money from the government. Everyone loves free money from the government. So why do I need an RESP to get this. *Well, the RESP is actually the vehicle that will get you that free money. You need to have a registered education savings plan to get it. The registered part, similar to your RRSP, which is a registered retirement savings plan, just means it’s registered with the CRA so that there’s a little bit of tracking involved. They know how much is going into the plan and also they can see how much is getting paid out to your child in the way of government grants and other incentives that they may be eligible for. *So how much are we talking here? *Sure, so the big grant when everybody looks at opening an RESP for the first time, kind of the big ticket that you’re trying to go for, is called the Canada education Savings Grant, or the CESG. And this one is lovely because it’s not an income tested benefit. So if your family makes a hundred dollars a year, or if you’re making several hundred thousand dollars a year, you can still get this grant for your child. And what it is is it works out to 20% per year on the first $2,500 that you put into a registered education savings plan. So the maximum that you can get in a year for that year is $500. And if you’ve missed a year, you’re allowed to go back one year at a time. So they’ll pay up to a $1,000 in grants. If, let’s say you had $5,000 available and you wanted to put it in right away to your children’s education, you could do that using the Canada Education Savings Grant. *So let’s say I’ve got like an eight year old or a ten year old. You’re saying I can apply now and I could get some back pay, it’s probably not the best way to say it. But you can get that room back, as long as you put in a big enough to deposit in initially? *Yeah, grants carry forward and the CESG grant will pay until the end of year the year that your child is seventeen. So if you’re starting a little bit later, your kid is a few years old, or even ten, thirteen, fourteen, fifteen, you can still, like I said, go back, but you’re only allowed to go back a maximum of two years at once. So this year and then one prior year. So the maximum Canada education savings grant that you can receive in any given year is a $1,000. Also, the maximum you can receive from the Canada Education Savings Grant is $7,200 per beneficiary. And a beneficiary is just the fancy RESP lingo for the person who will be going to school one day and receiving the benefit from this money. So over their lifetime, over the whole period of time that you’re contributing into the RESP for them, which is to the end of the year that they’re seventeen, basically what you’re trying to do is get that $7,200 put into the RESP through this grant so that you’ve taken the maximum. So, in our conversation about carry backs, if, like we said, you’ve started a little later and you have $5,000 per year, in just over seven years, you could have got the full shebang put into the RESP for your child from the government. *Well, that sounds good and this is probably better to start in the kids are young to then you got the compounding going on with the investments, you got the grants being poured in. So really, the earlier you start that grant just goes even further in the long run, doesn’t it? *That’s absolutely right. RESP’s are another great way for tax deferred growth. So, unlike an RRSP you’re not getting any money back or anything like that. When you put money into it. You’re using after tax dollars, but the money does still grow tax deferred. And there’s another benefit later that if your child does not decide to go on to post secondary education, you can actually get a return of your original contributions if you were the subscriber. Sorry, the subscriber is the person who’s putting money into the contract. So if you’d put this money into the contract, you actually have the ability to take the money that you put in, not counting the grants or the growth, back tax free. So it does not get added to your taxable income. But little bit more about that later. *So then, how will this work on a year by year when it comes to taxes? Are you getting taxed every year like you would end like a non registered plan, or does it get taxed towards the kid when they’re in school? *Yeah, so there’s there’s kind of two different ways, two separate this out. Well, the money’s in the plan. It’s tax deferred, so if you make any changes to the way that the investments are structured within the plan, you’re not getting a tax bill. So you want to get as much growth as you can because that growth is not going to be taxed until later on when your child is in school. And here’s kind of one of the sweet spots of having these plans in general. If your child is the one that’s receiving the money and they’re attending a qualified educational institution, which, to be very honest, a lot of them are. You can look at all up online if you’re not sure if your particular college or institution is accredited. The government of Canada has a site where they track all the institutions. That’s a sidebar. The sweet spot is actually that when a child takes the money out for their education, you can have it structured so that all of the growth that was in the plan is taxed in their hands and not yours. So I’m the adult that put in the money on behalf of my son and my son is now seventeen or eighteen and he’s going off to college. Well, maybe he has a part time job, maybe he doesn’t, but his income is likely going to be lower than mine. So there’s a huge benefit there to him taking it out at a much lower tax bracket then I would get. And, like I said, all of the growth on the money that we’ve made together within the RESP is what is the benefit to him? *Well, this could get interesting then when if the kid when they go to school, whether or not they’re working, because if they’re not working and then the money to take it out of the RESP, if that keeps them below the exemption threshold, they could give them a bigger break on their taxes to so that’s kind of something the debate whether you need to work or not when you’re in school. It’s how the tax from RESP could factor into all this and whether, or not you can stay below that threshold if you need to. There’s always a benefit to having it taxed in the child’s hand. If the child goes goes on to post secondary so’s it’s usually no to very low taxation and especially depending on the program I mean when you’re looking at the annual costs for some of these programs, you might be paying a couple thousand dollars per year. That’s a pretty low amount that you’re taking out of the of the plan. In that particular year. Right. So you can split it up over a period of time. *Well and as you’re saying, you can structure where you said, you can take the grants and the interest first. So then what happens when this just the principle left? Is that still tax towards the child or is that been cleared already? *Yeah, so let’s let’s back up just a little bit and talk about money coming out of the RESP. So we’re fast forwarding now. It’s been in the plan for a while and your kids ready, he’s you put on his backpack, he’s ready to go off to the big school and you’re ready to take money out of the plan. So the first thing that’s going to come out of the plan is the grants that you’ve received from the government and the growth that you’ve had within the plan. So the grants and the growth are the two portions that, if your kid does not go to school, that’s where you can get a acts bill and the grants, those would just go back to the government. So they actually, like you just said, get paid out first, and this is a huge advantage because if your child only does a year or two, there’s potential that they can be using that grant money, in that growth money and reducing the amount that would be taxable to you as the adult if they choose not to use their RESP. *So you’re saying that the kid goes in, does half a degree, drops out, burns through all the growth and the grants. I can get my principle back. *Yeah, you can get a return of your principle tax free, as long as you were the subscriber. So you were the person that put in the money. And a subscriber doesn’t always have to be the parent, right. It can be a guardian, it can be a grandparent. I mean if a child is in the public system, it can be a legal guardian or something, someone else who is providing care for that child. There are also different ways to structure these programs where you can have more than one subscriber. So sometimes the parents will go on jointly and say we’re both subscribers into this. In my experience there really isn’t a huge advantage to that. It actually complicates the paperwork because now you need two signatures for everything instead of one. What I prefer to see is a replacing subscriber. So if I’m the subscriber and I pass away, rather than the the RESP getting tripped up in my estate, because now I’m gone and it’s property of my estate. I would set it up so that Cameron becomes the subscriber after me, so that way there’s only one of us having to do all the paperwork at a time, but it still stays within the family, quote unquote, should anything go wrong between now and the time that the child needs the money. *So circling back a little bit, you mentioned before both the Canada education statements grant kind of being a flat payout to everyone. Is there any special exemptions where you can actually get more, because we know how government’s work? *Yes, actually so the basic education, Canada Education Savings Grant, the CESG that we talked about at the beginning. Like I said, that’s the main one, that’s the one that will pay you the most and that’s the one that the majority of people do go for right off the bat. But of course you want to maximize what you can receive. So there is an income test that can come into play that can get you more money into your RESP for your child if your income is in a lower bracket. So in 2021, if you had family income of $49,020 or less, which, ironically, here and BC, if you look at the combined BC and federal tax brackets, that’s actually the top end of a tax bracket. So there’s a little Easter egg there. I mean you’re paying tax at 22.07% but I digress. So with $49,020 or less, you can actually get another hundred dollars of the CEESG applied that year. And if your income is between that $49,020 and $98,040 which is another combined BC federal tax bracket of 32.79% for a little spoiler there for those that like that kind of stuff like I do. You can get up to another $50 for that beneficiary in that year. Now that basically just helps you to get to the limit of the $7,200 maximum faster. So you don’t necessarily get more money than the family that’s making higher levels of income than that, but you’re putting less into your RESP and getting more grants. Does that make sense? *Yeah, it’s it’s a little bit of a top up and every year they can afford one more textbook. *Exactly, it’s it’s helping you along the way a little bit more. And while we’re in the subject of grants, there’s another federal grant that is also income tested, that is is kind of targeted to people that might have a little bit of a lower income, and it’s called the Canada Learning Bond. So that would give you up to another$2,000,. It’s $500 in the first year and then $100 per year after that for up to fifteen years and up to the up to age twenty one on that one. Now, eligibility for the Canada Learning Bond, well, it’s income tested. It actually works a little bit differently. It’s based on the number of children that you have and your income. So if you have more kids you can actually have a bit of a higher income and still qualify, but the most common is for someone that has between one to three children. It’s in that same bracket as the Canada Education Savings Grant. So 2021 It was income of $49,020 or less, and that’s family income once again. But Hey, it’s an extra $2,000 that will go into your kids education, so we say why not? *So all these grants you’ve mentioned so far are federal full disclosure. We’re in BC. Are there any provincial grants available to us or like or could have an equivalent in another province? *Sure, yes, and this is something that is always changing. They change with the whims of the current government. So you can see provincial grants that are here today, gone tomorrow, and then a new one might appear or nothing may appear. So if your child meets the criteria for provincial grant, we always say grab it as quick as you can because you never know what their shelf life will be. And, as a Sidebar, not all of the providers of RESP plans will offer provincial grants. So you really want to make sure that you can get these in the RESP plan that you have. And again, that’s because these things are so changeable in nature. Right now in BC we have the BC Training and Education Savings Grant, or the BCTESG. And if you as the parent and the subscriber, are a resident here in BC, and residency is important. You have to prove through BC ID like a driver’s license or a service card, that you are permanently living here. You can receive up to $1,200. grant for children ages nine, sorry, six to nine. The real benefit is you don’t have to put any money in whatsoever to get it. All you have to do is apply. So if your child is in that age range and you live in BC open up an RESP, apply for it and boom, you’ll have $1,200 of free provincial money just waiting for your kid to to use when they graduate and start going off to post secondary. Now other provinces have other grants as well, but those will of course vary. And always see what’s current now because, like I said, they do change quite frequently. *And don’t forget, the earlier you do this that $1,200 can grow to a few thousand dollars and every little bit’s going to help for either residency classes, tuition, books, commuting and everything else. So if you have this it’s worth filing some paperwork to set up an our RESP just to get this $1,200 up front right away, *And it’s pretty easy to do. There’s lots of places you can go to get RESPs. But I should mention as well you do need to be a resident of Canada and your beneficiary needs to be resident here as well. So just please make sure that you meet those tests also before you apply, and your child will need a valid social insurance number. *So I remember with like our RRSP talks, there were different kind of types of plans available. I’m assuming that you’d be something similar with RESP. Is it just like one type of RESP for all people, or other different varieties you can apply for? *There are different kinds of RESPs and they do vary quite a bit in how they work. So choosing the right plan is probably the most important first step, and when you’re doing that it’s important to look at what you’re trying to accomplish and who you’re trying to accomplish it for. So let me let me explain. The two most common types of plans, or the two that we do all of the time at Braun Financial are individual plans and family plans. And individual plan is set up for one beneficiary. So let’s say you have more than one child. You can decide if you want to set up a family plan or if you want to set up an individual plan. Some people prefer individual plans because then they’re not having to track whose money is who’s right, because as the years go by over time there’s going to be different growth rates through the markets doing what they do. Some people like having the separation of this money is for my daughter, this money is for my son, that’s his, that’s hers. It’s clean and easy to track. You kind of know what’s gone into the plan. You can see these are the grants that apply to this child and it’s not kind of the big smush of everything getting in there together that you have with a family plan. Maybe, before I go a little bit further, let’s talk about kind of the major players in these plans as well. So you’ve heard me throw around the word subscriber before, and a subscriber very simply is just the person who’s putting the money into the plan, and in an evident individual plan that can be a parent, caregiver, can be a grandparent, it can be anyone really that cares about that child that’s wanting to give them a few bucks for their education. So an individual plan it can be you can put money into it for up to thirty one years and most of these plans, though they do have a lifetime, they have to be closed after thirty five years. There are some exceptions. Sometimes you can get it pushed to forty years and special circumstances, but for most people it’s thirty five years and then the plan is going to have to be closed and if there’s still money in their grants get paid back to the government and any growth is taxable. Or we can look at some strategies a little bit later on to mitigate some of the tax that might occur on on some of that. There there’s also a lifetime limit per beneficiary of $50,000 dollars, and that’s something that you’re going to want to track carefully because, like every other registered plan out there, if you go over there’s a penalty. So the the CRA will be sending you a tax bill of one percent per month if you go over that annual sort. It’s not an annual limit, it’s actually a lifetime limit, so you don’t have to worry about it until you’ve hit over$50,000 for one beneficiary. *So are there any benefits the family plan? Like can you save money and expense fees? Do you get better compounding rates? Why would I want to have a family plan if I have two kids? Do I get any benefit or should I just have the two separate plants going? *So I guess the big benefit from having a family plan is if one of your children chooses not to go to school or maybe chooses a program that’s shorter, like maybe they went to a one year diploma program or to Trade School that was only two years and they didn’t use the whole amount that was in the plan, then you’re looking at a situation where the growth and the gains can still be shared by your other children. So remember when we said when we take the money out of the RESP, the only thing that can be taxable to you as the subscriber, is the person who put it in, is the growth and gains, because the grants go back to the government and or hopefully the child takes them. Right. But potentially that’s where the trap is, that’s where the taxation to you would be, because your contributions come back tax free because they were essentially tax paid money that you put into the plan. So we see people move to family plans when it’s looking like that. One of the kids is maybe not going to fully utilize what’s in their RESPs. Now there are some rules here too. If you’re doing this, the beneficiaries have to be under the age of twenty one before being added into a family plan. Unless it’s a transfer, they have to be related, and related can be blood or adoption, so they’re part of your household in terms of your family. From that point of view, one of the advantages of a family plan is that the growth and gains within the plan can be shared between your children, and that includes the grants. So the CESG and in some cases the Canada Learning Bond as well, can be paid if the beneficiaries in the plans are siblings. Now a side note to this is that that each beneficiary can only receive the maximum of their personal lifetime maximum, which is the $7,200. So if you had two siblings and they each had received CEESG’s of $3,000 and one of them does not go to post secondary education through a family plan, that beneficiary that is going on to school could receive the full $6,000 in grants. In most cases. You’ll just have to make sure that the family plan only has your children named, because in some cases family plans can also include stepchildren grandchildren in addition to brothers and sisters. But it is a good idea to check with your provider just to be sure. *So we talked about family plans, we talk about individual plans and those are kind of your standard ones. Are there any types of our RESP’s for people should steer away from? Yeah, so the family and the individual plans, like I said, those are ones that we do very commonly at our office. I’ve never done a group plan. There is so there is another RESP type called group plans, or you may have heard them referred to as education funds or scholarship funds. They’re usually offered by scholarship or group plan dealers and they’re sold by Perspectus. So the way that they work is they take a whole pool of people and they invest everyone the same. So they’re all they’re all pulled together, administered together, and they have a date of maturity on the plan based on the beneficiaries date of birth, where they’re essentially saying okay, now you’re ready for school. The plans that I’ve seen that have kind of come come my way over time. They usually have strict rules, so you are usually signing up for a very specific amount of contribution over the lifetime of your child, and I think the biggest drawback of these plans is that if your child decides that maybe you know they’re at the age where they should be going to school but they’re just not ready yet, so they’re deciding not to start at the same time as everyone else in that group RESP that they’re part of, you can actually lose some of your earnings in the plan. So if you drop out or if your child decides not to go to school, it’s not like a regular individual or family plan where you can get your money back tax tax free, minus the grants in the growth like we’ve discussed. It’s actually a completely separate animal where this is property of the plan and that’s part of what you sign when you sign up for one of these. So your savings are combined with those of other people and it’s all shared. So you have to wait to the maturity date, your kid has to go to school on time. There are going to be limits to what is received. That gets a sharing of the growth in the plan. So’s it’s a lot more restrictive, and the thing that gets me with them is if I’m putting away my hard earned money for my child, I sure want to make sure that either they get it or I get it back, and because that can take this off the table. That is enough of a caution for me to not want to pursue that course of action. *It sounds like there’s a lot of negatives going that route and really going the individual and then the family roots sounds like a more secure and desirable way to go if you want to RESP especially you want to take care of your kids, no matter what decisions they making the future, because why change yourself to something that may not have a proper return or could just be more trouble for you than it’s worth? *Right? So, if someone’s really sold on one of these things because of maybe the marketing material that they’ve been shown by that particular provider, I will just encourage them to read the fine print. Read the Prospectus, is what they’re called. It’ll really tell you the INS and outs of how the plan works, when you will get your money, when you won’t get your money, and what will happen if you decide to stop, like, let’s say someone loses a job or money gets tight for a while and you just can’t. You know, that’s that’s real life. That’s real life for a lot of people. So you need to be in a product where it has to be flexible enough to handle that. Things. Things will happen and things don’t always go to plan. So just make sure that there’s there’s enough money on reserve for these if you two decide to make the commitment to them. But, like I said, it’s not something that I recommend. *Okay, after that little PSA we just had about the good kinds, the bad kinds of RESP’s let’s say I’ve got a kid or two. I got an RSP when they are really young. I’ve been claiming all my grants. I maxed out my contribution room at the RESP we’re fast forwarding eighteen years, how do we start actually pulling money out of this RESP and what can we do with it? *Right? So this is the part that gets a little bit confusing for a lot of people. So we’re going to get a little bit technical here and I’m going to throw out some strange language to you that hopefully, when the time comes, you can look back and say okay, yeah, you know what. I’ve heard about this before. The sounds familiar and we’ll try and make this this as simple as we can. So the first part is we’ve confirmed that the child is going to a qualified educational facility and program and that they’ve met the required length of the program. There are minimums in terms of if it’s full time part time. *Really it’s a lot of the same checks they do for student loan application, right? *It’s similar yeah, it’s basically the same idea of they want to make sure that you’re legitimately in a real program that’s going to benefit your future down the road and that you’re not just kind of auditing a class or going when you feel like, but you’re committed enough to completing this program in a reasonable period of time. So when your child applies for an RESP payment for the first time, they’re going to hear this funny little acronym called EAP. It stands for Educational Assistance Payments and, like I mentioned, there are some limits on them. Once you’ve been accepted into that qualified program, like, let’s say your full time and you’ve done thirteen consecutive weeks, you can get up to $5,000 out of your RSP for that program and once you’ve passed that thirteen week threshold, there’s no limit. It’s what the cost of the program is. If you’re a part-time student and you’ve met that qualifying educational program threshold. Again, they look at each thirteen week period individually. So because you’re not going at this full time, it’s a lower maximum as well. You’re only going to be able to take out about $2,500 per pop. So that’s each semester, each thirteen work week period. You’re going to have to re submit some documentation, which is going to include a letter from the register’s office of your institution basically saying you are enrolled, these are the dates of your programs, all of that fine logistics and stuff. That essentially just proves your enrollment. So what is an Educational Assistance Payment? See, it’s even hard to say. So this is paid to the beneficiary, which, like we’d said before, is what you want because they when they there is a taxable portion, are going to be taxed at a much lower rate than what you would be taxed at. But this portion, the EAP, is actually all the good stuff it’s your government grants and it’s your earnings on the investments and the incentives that have been invested in the plan. So all of the stuff that you want to have come out of your RESP first is going to be coming out through an EAP, through an Educational Assistance Payment. So get as much of that as you’re able to do. And, like I said, once you cross that thirteen week threshold, it’s wide open, based on the cost of your program and the other qualifying costs that can go along with it. So, because this is the grants and the gains on your RESP, this is included in the beneficiaries income and put on their tax return for the year that it is received. So this is going to be taxable but, like we’ve said a million times in this in this podcast, better tax in their hands than in yours. *Yeah, like we said earlier, especially if they’re not working, they should still be under their exemption threshold. So it shouldn’t be too bad on them. So let’s jump ahead a little bit further. So let’s say the kid goes through school, finishes the program but they didn’t use all the money in the RRSP. What options do I have as the subscriber. *Sure, so when and when it’s become clear that an RESP has run its effective lifespan, so that can be, like you’d said, the child is completed all the post secondary education that they’re going to complete, or the plan is coming up to its thirty five year maximum time that it’s allowed to be open and it needs to be closed. If there’s money that’s still in there, you might have to receive what’s called an AIP or an Accumulated Income Payment. Now that sounds confusing, so let me let me explain a little bit about what it is and what it isn’t. So the first thing that you’re going to do is you’re going to ask to get return to you, tax free, as the subscriber, any money that you’ve put into the plan, the grants, if there are any CESG, CLB, or provincial grants that haven’t been used, those would be repaid to the government at this time. And then everything else, so any earnings on the contributions, any earnings on the grants, basically any money that you’ve made that’s still in the plan after it’s run it’s useful life. Is What’s going to be called an accumulated income payment. And that’s going to be taxable to you as the subscriber of the plan. And this is where you have to be a little bit careful, and this is why we try and encourage the kids to use these as much as possible, because not only is it taxable at your marginal tax rate, so that’s added to the income that you’ve already made in this year through your working career, but there’s an additional 20% tax that’s added on top of your marginal tax rate. So this is really something that you want to avoid. So for most people this is not the bulk of the money, because you were able to take out your principle. It’s not the grants, it’s the growth, it’s money that you’ve made in the plan, but now it’s going to be pretty heavily taxed unless we can come up with a solution. *I understand why they putting these penalties and limits. They don’t want people using these the wrong way, use them as tax shelters. As places are you shouldn’t be doing investing without the proper parameters. But let’s say, just in case there is some money left behind and there are these restrictions of place, is there any kind of solution we could use get the money out? *There is their subject to limits of course as well, but one of the favorites is you can sometimes move property from one RESP to another. So it can go from an individual plan to another individual plan, because your kids are going to be different ages right so presumably if one plan is closing, a new plan will still have a few years left on it, so you can transfer some of the growth within the plan to another plan for another child at a different period of time. So there’s typically not not many restrictions in that area, except that the beneficiaries have to be sibling and, like we said, that can be adoption or blood and that age twenty one is still an important number in that the beneficiary that will be receiving the money has to be under the age of twenty one when that receiving plan was opened. So there if the kids are spaced out enough in age, this could be a strategy that would work. Now, if you’re at the stage where all of your kids are done at this point and there’s still some money sitting around in there, then you can contribute. So you can’t go over the lifetime maximum, which is $50,000, but it can go into your RRSP or your spouse’s is RRSP, which will give you the tax deduction your marginal tax. Right now there’s still that 20% extra tax. But if you have the RRSP contribution room available, you can put the money into either a spousal or an individual RRSP in your own name and claim that deduction. Now there are some rules. In most cases you want to be the original subscribers, so you want to be the person that put this money in. So it might get a bit stickier if the money came from someone else, or it may not be eligible if the money came from someone else. But the best strategy is always to minimize the problem right. So encourage your kids to get as much education as they can handle. It’ll benefit them and it’ll benefit you as well. And, like I said, because of the order of the withdrawals, the grants and the gains come out first. So hopefully, as long as your kids have done a few years, you’ve been able to take out the gains and the growth and in an ideal situation the money that’s left over is the return of your own contributions, which is tax free. So that’s that’s really what we’re going to making sure that they’ve done enough post secondary education that they’re benefiting for it from it in their own career. And you’re benefiting from it in that you’re not going to have to pay this Sur tax of twenty percent in addition to your regular tax. *All this sounds well and good, but how do I actually go get an RESP right now? Let’s say I’ve got kids. All this sounds great. I want some free, sweet sweet government money coming my way. How do I get the RESP? Where do I go to? Who do I talk to? *Yeah, for sure. I mean, obviously we’re a little bit biased in that we always love to have new people come to see us at Braun Financial so that we can help set you up and help you avoid some of the pitfalls in structure that cannot can happen when things aren’t set up correctly. But otherwise, I mean most of the banks, credit unions, things like that will have them. You can go direct to some companies as well, but I always recommend working with an advisor for these kinds of things, just because the devil’s always in the details and through experience your advisors probably come across a few things that can be used to help you out with your own planning. So that’s that’s our overview about our RESP’s today. We hope that this can help you help your kids out secure their future or at the very least give them a nice head start. And, like I said, there’s tons of benefits from tax deferred plan like an RESP, and there’s certainly huge benefits from getting free money from the government. So we hope that wherever you are, you can use these to the best of your ability, maximize the money that you can get and give your kid every advantage going forward in their life. So that’s all from us this week. Take Care and until next time, all the best